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The CAP’s impact on African agriculture: focus on milk

The CAP’s impact on African agriculture: focus on milk. The contest: Advancing African Agriculture, the monitoring exercise of European policies on African Agriculture.

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The CAP’s impact on African agriculture: focus on milk

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  1. The CAP’s impact on African agriculture: focus on milk

  2. The contest: Advancing African Agriculture, the monitoring exercise of European policies on African Agriculture Over past 2 years European CSOs and African FOs (ROPPA; EAFF; PROPAC) have taken initiative to monitor thr extent to which European policies on development and agriculture in Africa have been in line with the EC Communication 2007 AAA. Dialogue with EC on 16 September 2010 : Land grabbing; Food facility; The impact of PAC on the Milk sector in Africa

  3. Milk study: some elements Implemented by GRET (Association de solidarité et de cooperation international). Objective To demonstrate whether or not CAP impedes the potential development of the African dairy system To propose actions and political options that will favour both the European and African dairy producers Object PAC and impact on diary sector in Africa. Diary sector in Senegal / Burkina Faso and Kenya Methodology Statistics, interview to European and African key actors

  4. PAC in Europe • Initial philosophy of the PAC was intended to increase productivity supporting production in quantitative terms through price support: • - Mechanism of limitless and automatic collection of powdered milk and butter • High levels of repurchase on import and exports refunds that ensured producers protection from external concurrence and guarantee competitive prices. • Structural imbalance between supply and demand • 1984 Milk quotas with the objective to contain production

  5. PAC in Europe Which agricolture? The diminishing of offer is made through the reduction of number of heads (of cattle) and increase of the return. Consequent process of production concentration with expulsion from market of the smaller farms and increase in the dimension of the farms. Italy increases average dimension of farms of 61,4% and they concentrate in some regions (spatial concentration)

  6. PAC in Europe Today EU supports to agriculture do not represents the most important form of support of agriculture. 2 new funds in 2005: EAGF and EAFRD Strong reduction of the export subsidies from 2007 but facing the current crisis in the industry, the E.U. has deployed other support mechanisms. Today the most important form of support to European agriculture are « decoupled » direct aids to farmers

  7. Africa: which market for European Union? In 2008 il 22% of milk European export to Africa (about 5 milions tons). Algeria, Nigeria, Egitto Senegal, Ivory Coast. Also north African countries are an important market for powdered milk of EU In Burkina Faso and Senegal between 40 and 50% of powdered imported milk comes from Europe

  8. Production and milk market in Africa: constraints and potentialities Constraints - Premise: difficulties in obtaining reliable data - Structural adjustment policies implemented by the IMF and WB in LDC included reduction of trade barriers and encouraged imports. - African demand for milk saw a large increase due in part to growing urbanization. African consumption of milk and dairy products exploded in recent years and consequently also imports in the 80s. - Local offer is not sufficient. Weak local productivity (In Africa, milk production 461 Kg per cow per year and and in Europe 5874 Kg), difficult access to land and credit, difficulties in collection of local milk, poor veterinary services and training, low quality of the products.

  9. Milk production in Africa (tonnes): includes camel, cow, goat and sheep milk (whole and fresh)

  10. Production and milk market in Africa: constraints and potentialities Potentialities Livestock farming plays an essential role for about 200 million people in Africa (FAO, 2005. Essential role that the livestock farming sector could play to lower poverty and to increase food security in Africa. Farming already is a large proportion of the gross national product in certain countries including Mali. Factors of potential strength of farming in Africa: • Existing market in Africa large and increasing • There is much room for improvement in efficiency in the existing, extensively family-based system • Mini-dairies are developing and showing their ability to revitalize the milk collection and distribution industry in Africa

  11. Case Study: Senegal, Burkina Faso and Kenya In Burkina Faso and Senegal dairy imports increase in volume between 2004 and 2006. Decrease in 2007 due to sharp increase in prices. In the same period, production increased but demand was still too high to be met by local production. In Burkina Faso powdered milk represents 76% of the total imported milk Kenya is a good example for Africa regarding production of milk

  12. Case Study: Senegal, Burkina Faso and Kenya UE privileged trading partner with Africa (Western Africa) in dairy products even if the total of milk imports diminished from 2006 to 2007 (important element to take into account to see the impact of the CAP and subsidies on the development of dairy production in Africa). This corresponded to a diminishing of export subsides in PAC.

  13. Elements of diary sector in Burkina Faso - Milk imports began in 70s (drought). - In 2006 55% of national diary demand met by local production (exception of the cities). - 80% of production of local milk is concentrated in a 4-month window - Policies that privilege insemination while main problems are animal nutrition, difficulties in collection of local milk, access to credit and modern equipment, lack of training to farmers and lack of commercial nets.

  14. Elements of diary sector in Senegal 2/3 milk products are imported Different production systems co-exist in this country (predominance of extended traditional system - weak productivity and weak commercial development) Incoherent commercial measures encourage import and sustain local production (i.e. PRODELAIT). Dynamic sector with high number of mini-dairies born with scarce State support Same weaknesses of most African countries

  15. Kenya Biggest milk producer in Africa. Milk production increased of 84% from 2000 to 2007. Kenya: export country (to North Africa and Middle East). Differently from other African countries independent milk collectors get milk supply from small farms contributing to the 86% of the national production.

  16. Kenya Two factors explain this different development of the dairy industry in Kenya: Import tariffs on powdered milk (from 25% to 60% 1999- 2004). Strong role of informal economy (producers, dealers and collectors) revitalise the sector.

  17. Obstacles to development of dairy production in Africa: Internal or External? Concurrency of imported/local milk Difference in competitiveness: prices of imported products are inferior even if gap diminished with the sharp increase in prices at the end of 2007: 1 L powdered imported milk =340 CFA francs 1 L local milk = 700 CFA francs Difference of competitiveness between transformation and production structures Subvention that permits to diminish production costs in Europe

  18. Obstacles to development of dairy production in Africa: Internal or External? Concurrency of imported/local milk Concurrency determined by other factors (no prices): • product availability in the marketplace • product availability throughout the year (seasonality) • consumers’ taste, quality of the product (preferences for local milk increasing but problems with milk collection and high standards of quality required for guarantee)

  19. Obstacles to development of dairy production in Africa: Internal or External? Review of literature on PAC impact: • Via Campesina/OXFAM/ Confederation paysanne in France condemn export subsidies (until 2007) and then the decoupled direct aid disguising the practice of dumping (unfair competition - prices inferior to cost). This is combined with weak infrastructure and deficient local policies • Structural weaknesses and shortcomings in internal policy, from a lack of local investment and the countries’ poor farm business infrastructures.

  20. Obstacles to development of dairy production in Africa: Internal or External? European Commission Do CAP exports subsidies destroy farmer's livelihoods in developing countries? Not any more. 1995 -10 billion euros/year export subsidies 2009 - 350 million Euros export subsidies (Senegal, Burkina Faso Kenya 2000 2007 2% from 2007 1%). Prices aligned with world market export subsidies no longer needed

  21. Obstacles to development of dairy production in Africa: Internal or External? Point of view of African questioned in the survey Powdered imported milk from Europe impedes the development of the dairy industry in Africa; many milk-transforming businesses prefer to use imported powdered milk Subsidies in Europe exacerbate the internal constraints already present like insufficient economic policies directed to big farmers and not responding to small local farmers Progressive regulation of imports is necessary, and the implementation of policies that favour local production of milk

  22. Policies and common challengesbetween farmers in the North and the South Opposition not between north and South but models of production in agriculture Common objectives between European and African farmers: • desire to gain a proper living from farming (fair price) • the necessity to find ways to defend small family-based farming organizations (in Africa accounting for 85% of production, while in Europe small producers victims of recent agricultural policies that favour of large-scale producers • to increase food sovereignty: each country must have the freedom to define their own agriculture policy to defend family based farming, in the north and in the south • market regulation in Africa and in Europe

  23. Strategies to develop Each region must define its own strategies and politics according to local priority and contest. In term of specific strategies the idea that keeps coming to the forefront is market regulation in Africa and in Europe. Both farmer groups emphasise the need to maintain production quotas in order to manage the supply side of the market. in Senegal and Burkina Faso setting up protection measures appears to be a necessary step towards the development of local production and the strengthening of self-sufficiency. protectionism alone not sufficient must be accompanied with governmental support and production assistance

  24. Thanks www.europafrica.info

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